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Judge Tjoflat did it up in a big way a couple of weeks ago in Lowery v. Alabama Power Company, Nos. 06-16324 & 06-16325, slip op. (11th Cir. Apr. 11, 2007). We’re not sure if we’re providing a link to the case itself or to the “opinions” page of the Eleventh Circuit website; if we’ve forced you to hunt around, just plug in the date or case name and you’ll find the opinion. (Sorry about the inconvenience, chief.)
Lowery was an environmental pollution case filed in Alabama state court. After assorted amendments to the pleadings, the operational complaint pleaded claims on behalf of more than 400 plaintiffs against 14 named defendants and 120 fictitious entities. The last-named defendant removed under the “mass action” provisions of the Class Action Fairness Act of 2005. In the words of the trial court that remanded the case, there was nothing in the original complaint to distinguish “between a plaintiff who may be claiming severe lung disease from one who may be claiming grit in her grits.” Lowery v. Honeywell Int’l Inc., 460 F. Supp. 2d 1288, 1291 (N.D. Ala. 2006). The Eleventh Circuit granted a motion for leave to appeal the remand order.
Although Judge Tjoflat wrestled with many issues at length in his 77-page opinion, we’re cutting to the chase on the preliminary stuff to get to the things that interest us. Here’s the chaff: First, the parties agreed that CAFA applied to the case, because the removing defendant, Alabama Power, had been joined after CAFA’s effective date. Second, Alabama Power had the power, by itself, to remove the entire action, including all claims brought by all plaintiffs against all defendants. Third, the “mass action” provisions of CAFA were poorly written, in ways that will challenge future courts to resolve some awfully thorny issues. (One of those issues is whether the “mass action” provisions authorize only expanded removal jurisdiction or whether they also apply to federal courts’ original jurisdiction. Lowery, slip op. at 32 n.41.)
Now, here’s the wheat: CAFA makes certain actions naming 100 or more plaintiffs and involving an aggregate amount of $5 million in controversy removable, “except that jurisdiction shall exist only over those plaintiffs whose claims in a mass action satisfy the jurisdictional amount requirement under subsection (a),” which is $75,000. What does this mean? Defendants asserted that the court had jurisdiction over the entire case if the aggregate amount in controversy was $5 million; the claims of individual plaintiffs with less than $75,000 in controversy could then be remanded. Plaintiffs, conversely, insisted that the entire lawsuit was removable only if there were both $5 million in controversy in the aggregate and all plaintiffs had individual claims worth $75,000. The court wrestled with more issues of statutory interpretation and legislative history than you would imagine existed (all of which will be useful background for folks briefing these issues in the future) and concluded that the defendants were right. If there’s $5 million in controversy in the aggregate, the entire case is removable, and the individual claims of any plaintiffs placing less than $75,000 in controversy can then be remanded. Slip op. at 41-42.
Second, the court did not reach the question of which party bore the burden of proving that particular plaintiffs’ claims do not place $75,000 in controversy. The court hinted, however, that the burden may properly be placed on plaintiffs. Id. at 49 n.55.
Finally, the court held that the defendants did not meet their burden of proving that the Lowery complaint placed an aggregate of $5 million in controversy. The court held, first, that in assessing the amount in controversy, the trial court could examine only “the notice of removal and accompanying documents.” Id. at 61. The court did, however, analyze the contents of a supplement to the notice of removal that the defendants had filed after receiving plaintiffs’ motion to remand. Id. at 60-61. We hope this means that trial courts can routinely consider materials that defendants file in opposition to a motion to remand, but we can’t be sure. Careful counsel may choose to err on the side of submitting all of their evidence supporting removal in (or accompanying) the notice of removal itself.
The Eleventh Circuit also held that it would be error for a trial court to permit a defendant to take discovery after removal to prove that the amount in controversy requirement was satisfied. Id. at 63-64. “A district court should not insert itself into the fray by granting leave for the defendant to conduct discovery or by engaging in its own discovery. Doing so impermissibly lightens the defendant’s burden of establishing jurisdiction.” Id. at 68.
Finally, the court held that, at least on the facts before it, the defendant could not establish the aggregate amount in controversy by showing that plaintiffs in other similar cases often receive large recoveries, which would, if recovered by the plaintiffs in Lowery, total more than $5 million in the aggregate. “[I]n the present dispute — with a record bereft of detail — we cannot possibly ascertain how similar the current action is to those the defendants cite.” Id. at 75.
This is tough medicine, for two reasons. First, if defendants must establish the jurisdictional amount in controversy at the time of removal based only on evidence obtained in the very case at issue, removals will naturally be effected later in litigation. We’re not at all sure that’s what Congress had in mind when it passed CAFA. Beyond that, removing defendants are always making a hard tactical decision about the proper time to remove: If they remove too early, without sufficient evidence of the amount in controversy, they can be forced to pay the attorney’s fees plaintiffs incur in obtaining remand. But, if defendants wait too long to remove, they can be told that they missed the 30-day window for removal (after a case first becomes removable) and will face remand for that reason. If the Eleventh Circuit really wants defendants to wait, that’s okay — but we hope we’re not going to routinely hear in later cases that defendants are being remanded for unduly delaying removal.
Second, we’re not at all sure that the Eleventh Circuit means what it says about not being able to compare the amounts recovered in earlier lawsuits to the claims plaintiffs are asserting in the case being removed. Perhaps, in some circumstances, that’s true. Environmental contamination claims are sometimes serious and sometimes not; if plaintiffs suffered “lung disease” in the early case and “grit in their grits” in the later case, the cases are not comparable.
But what about other types of litigation? Can’t a court reasonably assume that the recovery in a wrongful death or “bad baby” case will be in the range of recent recoveries in similar cases? We suspect — and hope — that later courts will retreat from the Eleventh Circuit’s overbroad language in Lowery and, in some cases, permit defendants to establish the amount in controversy by analogy to past precedent. Until those later courts do in fact retreat, however, defense counsel will be forced to play a treacherous game of removal at their clients’ peril.